Microsoft's new Hotmail takes aim at Google

Redmond is hoping a major update will improve Hotmail's image and allow the free Web mail service to be considered a serious rival to Gmail.

Like all parents, Microsoft likes to tout the accomplishments of its offspring. Any conversation about Hotmail is likely to start with the fact that, at least globally, the free Web mail service has more active accounts than any of its rivals.

Pressed, though, company officials also see Hotmail's shortcomings. In recent years, rivals Google and Yahoo have been ahead of the game when it comes to adding things like conversation views, mobile synchronization and other features. And Yahoo has more U.S. accounts, while Google has been growing faster than Hotmail. Beyond any one feature, though, Hotmail has come to be perceived as a technology laggard, rather than a leader.

"We're not where we want to be," Microsoft Corporate Vice President Chris Jones said on Monday at a briefing in San Francisco.

In attempting to turn things around, Microsoft is falling back on an important parenting lesson--teaching its child to be better at sharing.

A key feature in the coming update to Windows Live Hotmail is an improved ability to share photos and Office documents using a combination of Web-based editing tools and cloud file storage. The new version, which will begin being offered to most users in July or August, aims to offer a better alternative to the standard attachment. Instead, Hotmail will offer the option of uploading a file or photo to Microsoft's SkyDrive service and e-mailing a link, as opposed to the file itself. The approach has several advantages, including avoiding issues related to file size limits that often make it hard to share videos, presentations, or large collections of photos. Recipients can then either download the files, or, in the case of photos, view an online slideshow.

The new version also allows users to view photos or videos from third-party services, such as Flickr, SmugMug, Hulu, and YouTube, all without having to leave Hotmail. The revamped Hotmail also adds a new "sweep" option that lets users easily divert mail from a particular sender into either a new folder or into the trash.

"This update I think is the most significant one we've ever done," Jones said. At a minimum, it's at least the biggest move for Microsoft since it completely revamped Hotmail four years ago.

On the mobile side, Microsoft will start using Exchange ActiveSync to allow Windows Live e-mail, calendar, and contacts to be pushed onto cell phones. To use both Hotmail and a corporate Exchange account, users will need a phone that supports dual ActiveSync connections. Today, the Palm Pre is one of the few devices that does so, but Jones said that Windows Phone 7 supports the feature, as does iPhone OS 4.

Microsoft general manager Brian Hall had suggested that many of these features are coming in a recent CNET interview.

In addition to letting users create their own e-mail filters, the new Hotmail also creates some views of its own, such as creating a separate view for shipping notifications and another for social-network updates, which now make up a significant number of all e-mail messages.

The software maker will also add the option for users to send their e-mail using an encrypted HTTPS connection. In January, Google made a secure Net connection the default following a cyberattack on its mail service .

Two features that won't be part of the summer upgrade, but are also on the horizon, are the ability to have multiple e-mail aliases in a single account as well as an option to update a mail account with a new name. That latter feature is particularly useful if a user is hoping to move from, say "DaveDrinks21" to "Davethefuturegovernor," without having to start over with a new account, e-mail history, and contact list.

Here's a look at how Hotmail has evolved since its earliest days:

 

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